This invention relates to generating and providing information about expected future prices of assets.
Among the kinds of information available at web sites on the Internet are current and historical prices and volumes of stock transactions, prices of put or call options at specific strike prices and expiration dates for various stocks, and theoretical prices of put and call options that are derived using formulas such as the Black-Scholes formula. Some web sites give predictions by individual experts of the future prices or price ranges of specific stocks.
A call option gives the holder a right to buy an underlying marketable asset by an expiration date for a specified strike price. A put option gives an analogous right to sell an asset. Options are called derivative securities because they derive their values from the prices of the underlying assets. Examples of underlying assets are corporate stock, commodity stock, and currency. The price of an option is sometimes called the premium.
People who buy and sell options are naturally interested in what appropriate prices might be for the options. One well-known formula for determining the prices for call and put options under idealized conditions is called the Black-Scholes formula. Black-Scholes provides an estimate of call or put prices for options having a defined expiration date, given a current price of the underlying asset, an interest rate, and the volatility rate (sometimes simply called volatility) of the asset. Black-Scholes assumes constant interest rates and volatility, no arbitrage, and trading that is continuous over a specified price range.